Allocating products on shelves under merchandising rules: Multi-level product families with display directions

摘要

Highlights•Products are grouped on the shelves in families, to increase the viewers’ attention.•We formulate the Shelf Space Allocation Problem with multi-level product families placed in rectangular shapes.•We used single commodity flow constraints to model product sequencing.•We propose a new MIP-based heuristic that decomposes the problem in sub-problems.•Results were obtained using real world benchmark instances from a Food Retailer.AbstractRetailers’ individual products are categorized as part of product families. Merchandising rules specify how the products should be arranged on the shelves using product families, creating more structured displays capable of increasing the viewers’ attention. This paper presents a novel mixed integer programming formulation for the Shelf Space Allocation Problem considering two innovative features emerging from merchandising rules: hierarchical product families and display directions. The formulation uses single commodity flow constraints to model product sequencing and explores the product families’ hierarchy to reduce the combinatorial nature of the problem. Based on the formulation, a mathematical programming-based heuristic was also developed that uses product families to decompose the problem into a sequence of sub-problems. To improve performance, its original design was adapted following two directions: recovery from infeasible solutions and reduction of solution times. A new set of real case benchmark instances is also provided, which was used to assess the formulation and the matheuristic. This approach will allow retailers to efficiently create planograms capable of following merchandising rules and optimizing shelf space revenue.